The Secretary oo State for Justice v Betts & Ors (Jurisdictional Points: Fraud and illegality), Court of Appeal - United Kingdom Employment Appeal Tribunal, April 20, 2017, [2017] UKEAT 0284_16_2004

Issuing Organization:United Kingdom Employment Appeal Tribunal
Actores:The Secretary oo State for Justice v Betts & Ors (Jurisdictional Points: Fraud and illegality)
Resolution Date:April 20, 2017

Copyright 2017

Appeal No. UKEAT/0284/16/DA



At the Tribunal

On 28 March 2017

Judgment handed down on 20 April 2017










Transcript of Proceedings






JURISDICTIONAL POINTS - Fraud and illegality

The Claimants were engaged on sessional work in HMPS and their recruitment was not on merit on the basis of fair and open competition. The question that arose subsequently was whether contracts of employment found to have existed by the Employment Tribunal were ultra vires in the circumstances.

Held: The Employment Tribunal was wrong to draw a distinction between appointment and employment in the context of s.10(2) CRAGA 2010. The mandatory requirement for all appointments to the Civil Service extends to both and operates as a statutory limitation on selection for all appointments as civil servants. The contracts of employment are ultra vires, but the Claimants' status as workers is unaffected. The appeal was therefore allowed.





  1. This is an appeal by the Secretary of State from a judgment of Employment Judge S Davies sitting in Cardiff with reasons promulgated on 9 March 2016. I shall refer to the parties as ``the Secretary of State'' and the Claimants as they were below. Although there were five Claimants in the original proceedings, the appeal is limited to addressing the claims of Mrs Betts, Mr Proctor and Miss O'Brien. They were recruited at different times, and all worked at HMP Usk/Prescoed. The other two Claimants, Mrs Penn and Mr Jones, were already appointed to the Civil Service when they commenced the sessional teaching work and, accordingly, the illegality argument raised by the Secretary of State but rejected by the Employment Tribunal could not apply in their cases.

  2. The judgment under appeal followed a hearing to deal with two preliminary points. First, whether the Claimants had the status of employees at the material times; and secondly, if so, whether their contracts of employment were void for illegality. The Claimants had been engaged by Her Majesty's Prison Service (`HMPS') on the basis that they were ``sessional workers'' and the Secretary of State contended that they were not employees in those circumstances. Further, because of that, they were not recruited on merit by a process of ``fair and open competition''. In a careful and well-constructed judgment, Employment Judge Davies found that the Claimants had the status of employees at the material times and that their contracts were not void for illegality because of the way in which they were recruited.

  3. There is no challenge to the factual findings of Employment Judge Davies, nor any challenge to the finding that the Claimants are (or were) employees. The two grounds of appeal pursued by the Secretary of State challenge the conclusion that as a matter of law the contracts of employment are not void for illegality on the basis that:

    (i) The Employment Tribunal misapplied s.10(2) of the Constitutional Reform and Governance Act 2010 (referred to as ``CRAGA 2010'') and its predecessor, Article 2(1) of the Civil Service Order in Council 1995 (referred to as the ``OIC 1995'') in holding that, while such provisions acted as a legislative constraint on the Secretary of State appointing the Claimants as civil servants, they did not act as any constraint on engaging them as employees within the meaning of the Employment Rights Act.

    (ii) It was an error not to hold that, if there was a contract of service, it was void ab initio as being ultra vires.

    The Facts

  4. The facts so far as relevant to the appeal are in short compass and can be summarised as follows. The three Claimants worked as teachers. None had a written contract but it was common ground that they all worked under a contract and that the terms of the contract under which they worked had to be inferred from the conduct of the parties. Since the Secretary of State accepted that they worked under contracts which required them when working to provide personal service and to undertake work under the control of the HMPS management (their work being integrated within the Learning and Development service within the prison), the central issue in relation to employment status concerned mutuality of obligation.

  5. The Claimants were each engaged at a time when there was a moratorium on recruitment of employed staff due to a restructuring programme within HMPS. The Employment Judge inferred that on their recruitment, there was a clear intention of long-term engagement. They were required to work to a timetable with public exams offered such as GCSE on some courses and with other courses offered on the basis of an ongoing commitment by the prison to continue offering it.

  6. Mrs Betts commenced working in May 2010 and resigned with effect from 30 January 2015. The recruitment principles at the date when her engagement commenced were contained in the OIC. Initially she worked two days a week but increased that to full-time hours in due course. The Employment Judge accepted her evidence that she was unable to withdraw her services on any particular day without prior permission and planning. She did not work for any other employer during the time that she worked as a teacher for HMPS. She worked under the control of HMPS and to their professional standards and the Employment Judge concluded that there was sufficient mutuality of obligation to establish a contract of employment.

  7. Mr Procter commenced working as a woodwork teacher in August 2011 and resigned with effect from 27 February 2015. He worked a 35 hour week delivering level I City and Guilds qualifications to offenders. Had he been unavailable on any day, the class would have had to be cancelled. He was required to maintain data for the courses and was subject to inspection and observation to maintain standards. He did carry out some private work for family and friends while working as a teacher but this was done at the weekend outside normal working hours at the prison. Again, the Employment Judge concluded that there was sufficient mutuality of obligation to demonstrate that an employment contract existed.

  8. Ms O'Brien commenced working teaching literacy in 2013 and remains in that role. She is primarily based at HMP Prescoed. She had a consistent pattern of working between 2013 and 2015 and was also subject to data recording requirements, inspection and observation. The Employment Judge found there was a requirement to notify HMPS of leave and seek approval and in reality, she was required to work to the planned timetable. The Employment Judge concluded that the level of control and the mutuality of obligation that existed supported the inference that she works under a contract of employment.

    The Employment Judge's judgment on illegality

  9. Having set out at paragraphs 28 to 63 inclusive the legislative framework in issue and the principles governing the issue of illegality, the Employment Judge set out her conclusions at paragraphs 64 to 93. She concluded that there were two key questions: first, whether a distinction could properly be drawn between appointment to the office of civil servant on the one hand and Crown employment on the other; secondly, whether the words of OIC 1995 and/or CRAGA 2010 prohibit the Secretary of State from entering into employment outside the recruitment principles of fair and open competition.

  10. So far as the first question is concerned, she concluded that there is a distinction between appointment to the office of civil servant which must be subject to the recruitment principles on the one hand, and Crown employment which is determined by reference to tests set out elsewhere including s.230 Employment Rights Act 1996 on the other (see [72] to [78]). Having reached the conclusion that a distinction exists, she concluded that the recruitment principles apply only to appointment to ``the Office of Civil Servant'' and not to recruitment to Crown employment. She reached that conclusion on the basis of the wording of the OIC 1995 and CRAGA 2010 and in particular, the terminology of CRAGA 2010 which she regarded as underlining the difference between the two types of selection (see [79]).

  11. The Employment Judge was not persuaded that the wording of the OIC 1995 is sufficiently explicit to displace the ability of the Secretary of State to enter into a contract of employment and concluded that the natural meaning of the words meant that the OIC 1995 applies to appointment to office only. She reached the same conclusion in relation to the CRAGA 2010. She therefore agreed that it was possible for the Claimants to be employed but not appointed to office with the Civil Service so that the OIC 1995 and/or CRAGA 2010 did not displace the Secretary of State's power to enter into contracts of employment outside the recruitment principles.

  12. Moreover although not necessary for her decision, she concluded that there was no evidence that either party knew of any possible illegality when the teaching engagements began and found the oral contractual arrangements...

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